One of the global rating agencies, Standard and Poor's (S&P) has predict that the Covid-19 pandemic will significantly hurt banks in Nigeria, Tunisia, Kenya, South Africa, Morocco and Egypt for at least three years.
The rating agency stated this in its latest global banking report that was released yesterday.
It listed risks that banks in the continent as well as other countries in the world would face to include
Prolonged effect of the pandemic on their economies; the likely rise in debt, a likelihood of default by debtors, among others.
For Nigeria, it stated that the pace of recovery of the banking sector would be affected by slow growth of the country's Gross Domestic Product, depreciation of the local currency and volatile oil prices.
Commenting on the global banking sector, it noted that, "the sharp rebound in global growth we expect in 2021, together with strong bank
balance sheets, support from authorities to retail and corporate markets, and
regulators' flexibility, should limit bank downgrades in 2021.
"Deviation from our base case, if the economic rebound is weaker or delayed, could
result in more negative rating actions, particularly in regions with a second wave of infections and the re-imposition of restrictions."
However, it noted that central banks' actions would remain positive for funding, but weigh on banks' interest margins and profitability.
It stated that the pandemic has accelerated banks' digitalisation and could trigger another round of restructuring and consolidation.
"Short-term support to banks and borrowers leaves longer-term overhangs. Anticipated surge in leverage leads to higher corporate insolvencies.
"The property sector is more severely hurt than expected. Ultralow interest rates are squeezing banks' net interest margins, increasingly making weak profitability a structural problem for many banking sectors, particularly in Europe and Japan.
"Banks need to take strategic measures as the pain will worsen. Those able to make structural
changes, including cost cutting and digitalisation, will suffer less.
"Mediocre profitability increases the likelihood of a round of consolidation, especially in Europe," it added.

Nigerian economy barely obeys the laws of economics... It is a benefit to Nigerian banks.